Varilek’s Cattle Call:  Outside Influence

A majority of the markets last week were led by the outside influence of the economy.  Sunday night provided negative economic headlines with Silicon Valley Bank struggles.  A second bank followed suit early in the week which created a mountain of uncertainty in the health of the United States economy.  That uncertainty sent negative trade to the commodities with increased volatility.  Fundamentals of livestock and grains took a back seat, and markets were more interested in how low the stock market was going to trade.

Cash feeder calves took a small correction from two weeks ago prices, but still held stronger levels in my opinion.  Live cattle trade was mixed and sideways like the previous two weeks.  Some $264 dressed trade and $164 live covered most of the trade I noted.  I was hoping for a stronger feel to the live cattle cash trade, but we are no means in a wreck.  The most unfortunate part for cattle feeders is the high cost of gains.  Feed cost and poor weather are eating in to much or all of the chance to make money on a turn of cattle.

The cattle on feed report Friday showed an “on feed number” of 96% which was in line with estimates.  Placements of 93% were 1% friendly, and marketings of 95% was 1% negative.  It looks to be a non-event but will serve as a general reminder of the tight numbers in the cattle inventory.  Have a good week.

Scott Varilek, Kooima Kooima Varilek Trading

The risk of loss when trading futures and options is substantial.  Each investor must consider whether this is a suitable investment.  Past performance is not indicative of future results.